Glenn Hubbard, Nonresident Senior Fellow at AEI and former chairman of the President’s Council of Economic Advisers, joins the conversation to discuss various economic dynamics. He analyzes the potential impacts of Trump’s policy proposals on the economy and delves into corporate tax cuts and job growth trends. The discussion also covers discrepancies in job count data and the complexities of the current labor market, including wage growth and the effects of immigration and inflation on different income groups.
Glenn Hubbard reflects on his non-linear journey to economics, emphasizing the role of influential figures and the blend of data analysis with human interaction.
The recent employment report indicates strong job growth, particularly in healthcare and hospitality, while raising concerns about the sustainability of this trend moving forward.
Hubbard calls for permanent tax reforms to stimulate investment but warns about balancing these initiatives with fiscal responsibility and efficient regulatory frameworks.
Deep dives
Career Path of Glenn Hubbard
Glenn Hubbard outlines his non-linear journey to becoming an economist, originally starting his education in engineering before discovering a passion for economics in college. Influenced by prominent figures like Alan Greenspan and Marty Feldstein, he realized that economics offered a blend of data analysis and human interaction. This led him to pursue graduate studies at Harvard, where he was inspired to investigate public policy through data. His career has since spanned influential roles in the Treasury Department, White House, and academia, showcasing the dynamic nature of economic analysis in policymaking.
Insights on Job Market Trends
The recent jobs report reveals a headline growth of 256,000 jobs in December, surpassing expectations and indicating a resilient job market. Key sectors driving this growth include healthcare, leisure and hospitality, and retail, though noteworthy declines in manufacturing were noted. Experts emphasize that while current average job growth appears strong, a more sustainable projection may hover around 150,000 to 175,000 jobs per month moving forward. The decline in wage growth to 3.9% year-over-year further illustrates the complexity and nuances within the employment landscape.
Understanding Corporate Tax Reforms
Significant discourse revolves around the Tax Cut and Jobs Act (TCJA) and its implications for corporate tax reforms. Hubbard underscores the importance of making certain tax provisions, like expensing, permanent to drive investment and economic growth, while cautioning against policies that could exacerbate the budget deficit. He mentions collaborating with economist Kevin Hassett on past tax reform studies, illustrating the need for data-driven approaches in determining the effects of tax changes on investment behavior. The ongoing conversation about tax cuts is further complicated by the necessity of addressing state and local tax deductions, particularly amidst a politically charged environment.
Regulatory Policies and Their Effects
The discussion highlights an urgent need for increased focus on regulatory policies, which can significantly impact economic growth and business decisions. Hubbard advocates for efficient regulatory frameworks that can help streamline infrastructure development and reduce delays associated with permits and zoning laws. The potential for revitalizing the economy through careful regulatory reform is emphasized, alongside the importance of balancing this with necessary fiscal responsibility. This approach suggests that well-designed policies can mitigate the risk of inflation while fostering sustainable growth.
Federal Reserve Independence and Economic Outlook
The conversation touches upon concerns related to the Federal Reserve's independence amid evolving economic policies and the pressing issue of inflation. Hubbard reiterates the importance of maintaining Fed autonomy to ensure sound monetary policy, which is vital for economic stability. The interplay between rising interest rates and inflation expectations poses significant challenges for fiscal management, as higher costs for servicing debt come into play. As policymakers navigate these complexities, the overarching goal remains to define clear objectives that promote growth while addressing potential economic disparities.
The Inside Economics team is pleased to welcome Glenn Hubbard, Nonresident Senior Fellow at AEI and former chairman of the President’s Council of Economic Advisers, to the podcast. Dante kicks things off with a summary of this week's "surprising" employment report. Glenn offers his opinions on the Trump administration's policy proposals and their potential effects on the economy. The group successfully navigates the statistics game through hints and joint effort.
Hosts: Mark Zandi – Chief Economist, Moody’s Analytics, Cris deRitis – Deputy Chief Economist, Moody’s Analytics, and Marisa DiNatale – Senior Director - Head of Global Forecasting, Moody’s Analytics
Follow Mark Zandi on 'X' and BlueSky @MarkZandi, Cris deRitis on LinkedIn, and Marisa DiNatale on LinkedIn
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